DallasNews Corporation (Nasdaq: DALN) today reported a second
quarter 2023 net loss of $0.9 million, or
$(0.16) per share, and an operating loss of $1.2 million.
In the second quarter of 2022, the Company reported a net loss of
$2.4 million, or $(0.45) per share, and an operating loss
of $2.3 million.
For the second quarter of 2023, on a non-GAAP basis, DallasNews
reported an operating loss adjusted for certain items (“adjusted
operating loss”) of $0.3 million, an improvement of
$0.8 million when compared to an adjusted operating loss of
$1.0 million reported in the second quarter of 2022. The
improvement is primarily due to expense savings of
$2.3 million, partially offset by a total revenue decline of
$1.6 million.
Grant Moise, Chief Executive Officer, said, “Overall, I am
pleased with the Company’s performance in the second quarter as we
continue to build a sustainably profitable digital media and
marketing company. This quarter we were pleased to see continued
year-over-year growth in local audiences consuming our digital
content. However, while total digital members continue to grow
year-over-year, we did experience a slight sequential decline in
our total number of digital members. This decline in volume
resulted from a combination of seasonally low starts in May and
June combined with elevated stops resulting from a deeply
discounted six-month holiday promotion from December. Digital
membership and marketing services revenue will continue to be
important for the Company as we pursue our goal of sustainable
growth.”
Second Quarter Results
Total revenue was $36.0 million in the second quarter of
2023, a decrease of $1.6 million or 4.2 percent when
compared to the second quarter of 2022.
Revenue from advertising and marketing services, including print
and digital revenues, was $16.2 million in the second quarter
of 2023, a decrease of $1.2 million or 7.1 percent when
compared to the $17.5 million reported for the second quarter
of 2022. The decline is primarily due to a $1.1 million or
9.8 percent decrease in print advertising revenue, driven by a
$0.8 million or 17.3 percent reduction in preprint
advertising revenue. As previously announced, the Company is
exiting its shared mail program to deliver weekly preprints and
inserts at the end of August 2023.
Circulation revenue was $16.0 million in the second quarter
of 2023, a decrease of $0.3 million or 1.6 percent when
compared to the second quarter of 2022. The print circulation
revenue decline of $0.9 million or 6.6 percent was
partially offset by the digital-only subscription revenue increase
of $0.6 million or 18.5 percent.
Printing, distribution and other revenue was $3.8 million,
a slight decrease of $0.1 million or 1.9 percent when
compared to the second quarter of 2022.
Total consolidated operating expense in the second quarter of
2023, on a GAAP basis, was $37.2 million, an improvement of
$2.6 million or 6.6 percent when compared to the second
quarter of 2022. The improvement is primarily due to savings of
$1.2 million in distribution, $0.6 million related to a
non-recurring lease cost benefit and $0.5 million in outside
services.
On a non-GAAP basis, adjusted operating expense was
$36.3 million, an improvement of $2.3 million or
6.1 percent when compared to the second quarter of 2022.
As of June 30, 2023, the Company had 644 employees, a decrease
of 27 full-time equivalents, or 4.0 percent, when compared to
the prior year period. Cash and cash equivalents along with
short-term investments were $22.6 million and the Company had
no debt.
Non-GAAP Financial
Measures
Reconciliations of operating loss to adjusted operating loss and
total operating costs and expense to adjusted operating expense are
included in the exhibits to this release.
Financial Results Conference Call
DallasNews Corporation will conduct a conference call on
Wednesday, July 26, 2023, at 9:00 a.m. CDT to discuss
financial results. The conference call will be available via
webcast by accessing the Company’s website at
investor.dallasnewscorporation.com/events. An archive of the
webcast will be available at dallasnewscorporation.com in the
Investor Relations section.
To access the listen-only conference call, dial 1-844-291-6362
and enter the following access code when prompted: 350158. A replay
line will be available at 1-866-207-1041 from 12:00 p.m. CDT on
July 26, 2023 until 11:59 p.m. CDT on
August 1, 2023. The access code for the replay is
5169966.
About DallasNews
Corporation
DallasNews Corporation is the Dallas-based holding company of
The Dallas Morning News and Medium Giant. The
Dallas Morning News is Texas’ leading daily newspaper with a strong
journalistic reputation, intense regional focus and close community
ties. Medium Giant is a media and marketing agency of divergent
thinkers who devise strategies that deepen connections, expand
influence, and scale success for clients nationwide. For additional
information, visit dallasnewscorporation.com or email
invest@dallasnews.com.
Statements in this communication concerning DallasNews
Corporation’s (the “Company”) business outlook or future economic
performance, revenues, expenses, cash balance, investments and
other financial and non-financial items that are not
historical facts are “forward-looking statements” as the term is
defined under applicable federal securities laws. Words such as
“anticipate,” “assume,” “believe,” “can,” “could,” “estimate,”
“forecast,” “intend,” “expect,” “may,” “project,” “plan,” “seek,”
“should,” “target,” “will,” “would” and their opposites and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially
from those statements. Such risks, trends and uncertainties are, in
most instances, beyond the Company’s control, and include changes
in advertising demand and other economic conditions; consumers’
tastes; newsprint and distribution prices; program costs; the
success of the Company’s digital strategy; labor relations;
cybersecurity incidents; and technological obsolescence. Among
other risks, there can be no guarantee that the board of directors
will approve a quarterly dividend in future quarters or that our
financial projections are accurate, as well as other risks
described in the Company’s Annual Report on Form 10-K and
in the Company’s other public disclosures and filings with the
Securities and Exchange Commission. Forward-looking statements,
which are as of the date of this filing, are not updated to reflect
events or circumstances after the date of the statement.
Contact:Katy Murray214-977-8869
DallasNews Corporation and
SubsidiariesConsolidated Statements of
Operations
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
In thousands, except share and per share amounts
(unaudited) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net Operating Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
16,223 |
|
|
$ |
17,457 |
|
|
$ |
31,532 |
|
|
$ |
33,721 |
|
Circulation |
|
|
15,996 |
|
|
|
16,250 |
|
|
|
32,007 |
|
|
|
32,346 |
|
Printing, distribution and other |
|
|
3,793 |
|
|
|
3,866 |
|
|
|
7,675 |
|
|
|
7,793 |
|
Total net operating revenue |
|
|
36,012 |
|
|
|
37,573 |
|
|
|
71,214 |
|
|
|
73,860 |
|
Operating Costs and
Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
17,236 |
|
|
|
16,804 |
|
|
|
34,609 |
|
|
|
33,214 |
|
Other production, distribution and operating costs |
|
|
17,293 |
|
|
|
19,725 |
|
|
|
35,321 |
|
|
|
38,974 |
|
Newsprint, ink and other supplies |
|
|
2,346 |
|
|
|
2,504 |
|
|
|
4,530 |
|
|
|
4,898 |
|
Depreciation |
|
|
357 |
|
|
|
716 |
|
|
|
730 |
|
|
|
1,428 |
|
Asset impairments |
|
|
— |
|
|
|
102 |
|
|
|
— |
|
|
|
102 |
|
Total operating costs and expense |
|
|
37,232 |
|
|
|
39,851 |
|
|
|
75,190 |
|
|
|
78,616 |
|
Operating loss |
|
|
(1,220 |
) |
|
|
(2,278 |
) |
|
|
(3,976 |
) |
|
|
(4,756 |
) |
Other income, net |
|
|
378 |
|
|
|
28 |
|
|
|
740 |
|
|
|
46 |
|
Loss Before Income
Taxes |
|
|
(842 |
) |
|
|
(2,250 |
) |
|
|
(3,236 |
) |
|
|
(4,710 |
) |
Income tax provision |
|
|
26 |
|
|
|
165 |
|
|
|
258 |
|
|
|
349 |
|
Net Loss |
|
$ |
(868 |
) |
|
$ |
(2,415 |
) |
|
$ |
(3,494 |
) |
|
$ |
(5,059 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Basis (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.16 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.65 |
) |
|
$ |
(0.95 |
) |
Number of common shares used in the per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
5,352,490 |
|
|
|
5,352,490 |
|
|
|
5,352,490 |
|
|
|
5,352,490 |
|
(1) The Company’s Series A and Series B common
stock equally share in the distributed and undistributed earnings.
There were no options or RSUs outstanding as of June 30, 2023
and 2022, that would result in dilution of shares or the
calculation of EPS under the two-class method as prescribed under
ASC 260 – Earnings Per Share.
DallasNews Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
June 30, |
|
December 31, |
In thousands (unaudited) |
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,928 |
|
$ |
27,825 |
Short-term investments |
|
|
10,669 |
|
|
— |
Accounts receivable, net |
|
|
11,734 |
|
|
14,023 |
Other current assets |
|
|
6,921 |
|
|
6,077 |
Total current assets |
|
|
41,252 |
|
|
47,925 |
Property, plant and equipment, net |
|
|
7,582 |
|
|
7,438 |
Operating lease right-of-use assets |
|
|
16,923 |
|
|
14,811 |
Deferred income taxes, net |
|
|
298 |
|
|
282 |
Other assets |
|
|
1,799 |
|
|
1,809 |
Total assets |
|
$ |
67,854 |
|
$ |
72,265 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
4,130 |
|
$ |
5,041 |
Accrued compensation and other current liabilities |
|
|
8,082 |
|
|
8,214 |
Contract liabilities |
|
|
10,694 |
|
|
9,504 |
Total current liabilities |
|
|
22,906 |
|
|
22,759 |
Long-term pension liabilities |
|
|
19,003 |
|
|
19,455 |
Long-term operating lease liabilities |
|
|
17,778 |
|
|
16,546 |
Other liabilities |
|
|
1,031 |
|
|
1,142 |
Total liabilities |
|
|
60,718 |
|
|
59,902 |
Total shareholders' equity |
|
|
7,136 |
|
|
12,363 |
Total liabilities and shareholders’ equity |
|
$ |
67,854 |
|
$ |
72,265 |
DallasNews Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
In thousands (unaudited) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Total net operating revenue |
|
$ |
36,012 |
|
|
$ |
37,573 |
|
|
$ |
71,214 |
|
|
$ |
73,860 |
|
Total operating costs and expense |
|
|
37,232 |
|
|
|
39,851 |
|
|
|
75,190 |
|
|
|
78,616 |
|
Operating
Loss |
|
$ |
(1,220 |
) |
|
$ |
(2,278 |
) |
|
$ |
(3,976 |
) |
|
$ |
(4,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expense |
|
$ |
37,232 |
|
|
$ |
39,851 |
|
|
$ |
75,190 |
|
|
$ |
78,616 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
357 |
|
|
|
716 |
|
|
|
730 |
|
|
|
1,428 |
|
Severance expense |
|
|
608 |
|
|
|
428 |
|
|
|
825 |
|
|
|
560 |
|
Asset impairments |
|
|
— |
|
|
|
102 |
|
|
|
— |
|
|
|
102 |
|
Adjusted Operating
Expense |
|
$ |
36,267 |
|
|
$ |
38,605 |
|
|
$ |
73,635 |
|
|
$ |
76,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net operating revenue |
|
$ |
36,012 |
|
|
$ |
37,573 |
|
|
$ |
71,214 |
|
|
$ |
73,860 |
|
Adjusted operating expense |
|
|
36,267 |
|
|
|
38,605 |
|
|
|
73,635 |
|
|
|
76,526 |
|
Adjusted Operating
Loss |
|
$ |
(255 |
) |
|
$ |
(1,032 |
) |
|
$ |
(2,421 |
) |
|
$ |
(2,666 |
) |
The Company calculates adjusted operating income (loss) by
adjusting operating income (loss) to exclude depreciation,
amortization, severance expense, (gain) loss on sale/disposal of
assets, and asset impairments (“adjusted operating income (loss)”).
The Company believes that inclusion of certain noncash expenses and
other items in the results makes for more difficult comparisons
between years and with peer group companies.
Adjusted operating income (loss) is not a measure of financial
performance under generally accepted accounting principles
(“GAAP”). Management uses adjusted operating income (loss) and
similar measures in internal analyses as supplemental measures of
the Company’s financial performance, and for performance
comparisons versus its peer group of companies. Management uses
this non-GAAP financial measure for the purposes of evaluating
consolidated Company performance. The Company therefore believes
that the non-GAAP measure presented provides useful information to
investors by allowing them to view the Company’s business through
the eyes of management and the Board of Directors, facilitating
comparison of results across historical periods and providing a
focus on the underlying ongoing operating performance of its
business. Adjusted operating income (loss) should not be considered
in isolation or as a substitute for net income (loss), cash flows
provided by (used for) operating activities or other comparable
measures prepared in accordance with GAAP. Additionally, this
non-GAAP measure may not be comparable to similarly-titled measures
of other companies.
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